CIA (e)Bulletin/(e)Bulletin de l'ICA
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December 2018
 
 

Activities of the Standards and Guidance Council

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By Faisal Siddiqi, FCIA

Background and Origin

The Standards and Guidance Council (SGC) was officially formed on September 1, 2018 following the phase 1 reorganization of the CIA’s governing structure. The responsibility of the SGC is twofold. We review educational notes prepared by the four largest practice committees:

  1. CLIFR: Committee on Life Insurance Financial Reporting;
  2. CRMCR: Committee on Risk Management and Capital Requirements;
  3. PCFRC: Committee on Property and Casualty Insurance Financial Reporting; and
  4. PPFRC: Committee on Pension Plan Financial Reporting.

The SGC also establishes designated groups (DGs) for the Actuarial Standards Board (ASB) when new CIA standards are being developed. These functions simplify the work of the SGC and help the ASB. Previously, the SGC was known as the Practice Council and had over 12 practice committees reporting to it. The other committees now report to the new Practice Development Council whose main focus is to help establish newer practice committees and provide a strategic eye for the CIA on new trends.

The following are the SGC’s members: Faisal Siddiqi (Chair), Steve Easson (Vice-chair), Marie Hélène-Malenfant (Workplace Safety and Insurance Board (WSIB), life insurance), Pierre-Paul Renaud (P&C), Dean Newell (pension, actuarial evidence (AE)), Eric Lemay (life insurance), and Stephen Cheng (group, pension, AE). We are supported by CIA staff member Josée Racette, who handles all the logistical, governance, and documentation preparation.

Since September 1, 2018, we have had one conference call and our annual face-to-face meeting in October 2018 in Toronto.

SGC Activities

Currently, CLIFR and the PCFRC are very busy with IFRS 17. CLIFR has established seven working groups and the PCFRC has established four. These working groups cover the following:

  • Probability-weighted cashflows;
  • Risk adjustment;
  • Discount rate setting;
  • Participating insurance;
  • Contractual service margin/coverage units;
  • Market-consistent valuation of financial guarantees/segregated funds; and
  • Embedded derivatives and investment components.

All of these working groups are preparing guidance notes to help life insurance actuaries and P&C actuaries with the implementation of IFRS 17. The SGC expects to receive these notes for review and commentary during late 2018 and throughout 2019 as they become ready for distribution.

Both CLIFR and the PCFRC released their fall letters (CLIFR, PCFRC) to provide year-end guidance.

The PPFRC is also working on a number of guidance notes related to pension funding risks, stochastic modelling, uses of letters of credit in going concern funding, and quarterly updates on annuity purchase rates. They are providing input on the upcoming changes to the commuted values standard and implementation of MI-2017 into the pension commuted values standard.

Committee on Risk Management and Capital Requirements

The recent achievements and current initiatives of the CRMCR are as follows:

  • Produced a Revised Educational Note on Regulatory Capital Filing Certification for Life Insurers.
  • Submitted a response to the Office of the Superintendent of Financial Institutions’ (OSFI’s) public consultation on their discussion paper on reinsurance.
  • Prepared a response to OSFI on draft versions of the 2021 Life Insurance Capital Adequacy Test (LICAT) and Minimum Capital Test (MCT) Guidelines. Two working groups were established for life and P&C.
  • Preparing additional guidance for dynamic capital adequacy testing (DCAT) in 2019 for IFRS 17.
  • Preparing an educational note for the financial condition testing (FCT) (the new DCAT), to be released concurrently with the revised standards of practice.
  • Providing support on capital issues for IFRS 17.
  • Preparing a CRMCR update letter on initiatives in 2019 (could possibly include links to FCT/DCAT guidance, regulatory filing educational note, 2019 guideline and forms, and a list of useful articles relevant for own risk and solvency assessment (ORSA)/DCAT).
  • Preparing for sessions at future Seminars for the Appointed Actuary and the Annual Conference.

In terms of DGs, the SGC is working with the ASB to form three different ones related to the quinquennial review of part 3000 of the Standards of Practice. We look forward to working with the ASB in 2019.

If you have any questions related to the formation of the SGC or our activities, please do not hesitate to contact me at Faisal.Siddiqi@ca.ey.com or Steve Easson.

Faisal Siddiqi, FCIA, is Chair of the Standards and Guidance Council.

 

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